Federal government to spend $117M for Churchill railway sale, repairs

The federal government is spending $117 million to help facilitate the deal to sell and begin repairs to the flood-damaged rail line to the northern Manitoba town of Churchill.

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The deal, which sees Denver-based Omnitrax Inc. sell the railway, a marine fuel tank farm and the Port of Churchill to Arctic Gateway Group, was announced Aug. 31.

On Friday, Ottawa revealed details of its investment.

“We committed to find a solution to restore the Hudson Bay Rail line and we delivered,” said Manitoba MP Jim Carr, minister of international trade diversification.

“I am happy to say that repairs have begun and all efforts will be made to restore service before winter freeze-up.

“This collaboration has historic significance and we are excited to see the success the future will bring.”

Funding breakdown

Of the announced funding, $74 million will be spent over the next three years to help cover the costs of buying and repairing the line and the port.

The remaining $43 million will be spent over 10 years to pay for operations and to enhance the commercial viability of the line, the port and the tank farm.

A new deal to repair the Churchill, Man., broken rail line is inspiring hope in the small town. CBC’s Erin Brohman reports. 2:33

Ottawa also provided an additional $10 million as a repayable contribution to provide time for Arctic Gateway Group — a private-public partnership that includes Missinippi Rail Limited Partnership, Fairfax Financial Holdings and AGT Foods — to secure a loan for the sale.

Under terms of the arrangement, Arctic Gateway Group will not be providing dividends for at least 10 years, according to a release from the the federal government.

The money is coming through the Western Diversification Program of Western Economic Diversification Canada.

Repair work begun

Churchill, a community of roughly 900 people — and Canada’s only deep-water Arctic port, 1,000 kilometres north of Winnipeg — has been without a land route since the railway was damaged by flooding in May 2017.

The line also connects nearly 30,000 people from First Nations and other communities along the line, as well as the Kivalliq region of Nunavut.

The closure of the rail line drove up costs for fuel and food, which had to be brought in to Churchill by air or ship.

The negotiations for the purchase of Omnitrax’s Manitoba assets, including a rail yard in The Pas and a marine fuel tank farm in Churchill, along with the rail line and port, had been going on for months.

The federal government said Friday repairs to the line have begun and crews are working seven days a week in the hope of restoring rail service before winter.